Interest-Only Mortgage - No Repayment Vehicle

PeacefulWaters

getmore4less wrote: »

With over £80k+ debt you could look at bankruptcy.

Certainly worthy of consideration. There's nothing that's likely to remove the shortfall within a decade.

[Deleted User]

getmore4less wrote: »

Why go to repayment?

If you can't afford that at any time you will get in to arrears.

Stay on interest only and overpay you have more control over the contractual payment.

With over £80k+ debt you could look at bankruptcy.

That's great advice, thank you. I'll look into staying on ILA and making overpayments. It's unlikely that I'll get into arrears, unless I lose my job, but why take the risk unnecessarily?


As for bankruptcy... I have thought about it, but there are a number of reasons why I don't want to go that route - not least because I've never missed a payment on anything, and have never had bad credit, and because I currently work in the financial services sector and my company carries out credit checks.

dunstonh

Was this mortgage mis-sold to me? If so, is there anything I can do about it, or do I just have to accept that it's all just a result of my naivety/idiocy?

You bought after regulation. This means that you were issued a key features illustration in a format set by the regulator. This would contain the fees you paid and the risks you need to be aware of. Not in small print but clear and concise. What does your key features illustration say?

Next, did you even seek advice? You cannot complain about advice if you did not seek advice. A lot of lenders gave information only. You asked for you wanted, they told you what their terms and if you wanted it then you bought it.

If you sought advice and that advice was substandard then you may have some comeback but it isnt the sort of comeback you are probably looking for. You are not going to get your mortgage written off. Successful cases on mortgages are not common. The ombudsman had just 9254 complaints in the last year to date figures published (Apr to dec 13) and only 29% went in favour of the consumer. When you consider how many people have mortgages, that is low.

Generally, it depends on the documentation. There is also the issue that you bought an interest only mortgage. The clue is in the name. So, you would not only have to be naive but also have explain away that you didnt understand that interest only was interest only.

Took a look at your documentation as that is what they will do in any mis-sale complaint. Look at the risk warnings to see if they are there.

Bantex_2

kantboy wrote: »

I'm sure I really do sound naïve, but at the time I found it very difficult to comprehend that something that was apparently worth £175,000 could only be worth around half that only a few years later.

Winners and losers.
If you had spent the same amount at the same time on a place in London. it would probably be worth half a million by now.

ladeeda

In 2005/6 you bought at 110K as a first time buyer? Was this interest only?
In 2007/8 you remortgaged at 145K? If I have read this correctly, you were not an inexperienced 1st time buyer at this stage.

Were you pleased that your property was apparently worth 175K when valued?

dimbo61

Still the question of what happened to the £35K
You have been on Interest only since 2005/2006 and not paid back any of the DEBT
Cheap living until it catches up
You are not alone and Martin often talks about the Interest Only time bomb which will go off

magpiecottage

Lets start with the remortgage. That means whilst this may be your first property, it is not your first mortgage.

It is unlikely that the lender's valuer would have given an unrealistic valuation as it is the lender that is put at risk by this in the first instance.

The lender/adviser would not have been able to give specific advice on a repayment vehicle without FSA authorisation to do so - and nowadays it is common for them to specialise in mortgages or investments but not both.

As DunstonH says, you would have been given initial documentation which said that it was interest-only and that it was your responsiblity to ensure that you had a repayment vehicle. You would also have had this with your first mortgage.

Then each year the lender would have sent you a statement with a reminder of this.

I have dealt with a case of this nature. It went to FOS and I successfully argued that the sale of the mortgage was more than six years ago and that the complainant would have known that something was wrong more than three years ago.

It does also beg the question "how did you think it was going to be paid off?"

So you do need to change your arrangements and sort out a way of repaying it.

However, if you increase the payments each month then gradually the loan will go down. Over time the amount of the debt will decrease so progressively less of eac payment will be interest and more will reduce the debt.

The sooner you start repaying the better.